Non-Resident Landlord / Tax arrangements

My brother owns two rental properties. He recently lost his job and has decided to emigrate. I have agreed to manage his rental properties while he is abroad.

Since he will soon be a non-resident landlord, I believe it will be a legal requirement that his tenants only pay him 65% of the rent and that they must send in the other 35% direct to the Revenue.

Does anybody know if there is a way of avoiding this requirement ? For example, if he were to appoint a Fiscal Representative in Ireland (this works in other countries). In the UK a non-resident landlord can avail of the "Non-Resident Landlord Scheme" whereby the Inland Revenue may give approval for payment of rent in full, without deduction.

Is there an Irish equivalent?

Your brother can appoint an agent, i.e you, as long as you stay resident in the state to manage the property, (or a professional letting agency) to receive rents on behalf of him when he becomes an NRL. This takes away the obligation of the tenant deducting the tax due. You will then be chargeable in the name of your brother and can collect the rent, gross, and then retain the standard 20% from the rents received to satisfy the tax payable, before passing the remaining rental income to your brother. You won't need to pass a Form R185 to him then either. You will then be required to submit an annual tax return and accounts for the tax due, under self assessment. Hope this helps!

I am a bit confused about the 20% retained by the agent. How does this impact the agents tax return? Doesn't the agent pass this directly to the Revenue?

What happens if at the end of year the gross rental income has been completely eaten up by allowances and mortgage interest and net profit is zero, can the NRL then claim back the 20% from Revenue?

Hi Harry,

Basically if you are appointed as Agent, you receive 100% of the rents and take the responsible for completing the tax return for you brother. The amount of tax you pay to Revenue is calculated in the normal manner as if you brother were doing the return himself.

Just to note also, that a person going abroad usually forgets to cancel the tax relief at source that they have been benefiting from on their principal private residence (i.e. the 15%/20% or 25% that Revenue have been shoring up to pay off some of the interest on the bank loan) , make sure that neither mortgage continues to benefit from this subsidy from Revenue as your brother would not be entitled to it.